How Much Do Sellers Really Make When Buyers Accept an Offer on Poshmark ?

Alan

Jul 19, 2022 • 6 min read

Ever wonder how the amount you actually make when selling is determined on Poshmark? In this post, we'll walk through a specific offer scenario to break down how your final earnings are calculated based on the shipping offer and discount amounts you choose, and Poshmark's commission. We'll also offer tips for maximizing take-home earnings and pricing with offers and shipping discounts in mind.

For our examples, we'll assume you're making an offer on a dress currently listed at $100. For an offer to be valid, you need to reduce the price by at least 10% and offer a shipping discount.

Note: there's also sales tax that varies from state to state but that's not deducted from your earnings. It's automatically deducted from the buyers payment.

Scenario 1: How Much Money You'll Make on Poshmark Offering 10% off and Free Shipping for a $100 Item

You make (pre-Poshmark-commission): $82.33

Buyer pays: $90 plus tax

Price Reduction of 10%: earnings go from $100 to $90

With a price discount of 10% for this offer, 10% of $100 is $10. Therefore, the new sales price is $90 ($100 - $10).

$90 is the new price you're offering to likers on your item, which obviously reduces your earnings.

2. FREE SHIPPING for the shipping discount: earnings go from $90 to $82.33

The total shipping cost is shared between you and the buyer.

The current shipping rate on Poshmark is $7.67 in the United States (which typically increases overtime).

Since you're offering FREE shipping, this means the buyer pays nothing for shipping and you have to pay for the total shipping cost of $7.67.

Lets take $7.67 out of the $90 sales price which leaves you with $82.33—$64.33, after Poshmark's cut, but we'll cover that in a moment.

Scenario 2:How Much Money You'll Make on Poshmark Offering 10% off and $4.99 for a $100 Item

You make (pre-commission): $87.32

Buyer pays: $94.99 plus tax

If you chose a $4.99 shipping discount, then the buyer would be paying $4.99 for shipping and you'll be paying the remaining shipping cost of $2.68 ($7.67 - $4.99).

That's a less attractive offer for the buyer compared to free shipping, but you save nearly five dollars (since the buyer is paying $4.99 and you pay for the smaller $2.68 portion of the total shipping cost). Your new take home amount, before Poshmark's commission, would be $87.32. After commission, you'd make $69.32.

Scenario 3:How Much You'll Make Offering 10% off and $5.95 Shipping on a $100 Item on Poshmark

You make (pre-commission): $88.28

Buyer pays: $95.95 plus tax

If you chose a $5.95 shipping discount, then the buyer would be paying $5.95 for shipping and you'll be paying the remaining shipping cost of $1.72 ($7.67 - $5.95).

That's a least attractive offer for the buyer compared to free or $4.99 shipping, but you save the most money (since the buyer is paying $5.95 and you pay for the smaller $1.72 portion of the total shipping cost). Your new take home amount, before Poshmark's commission, would be $88.28. After commission, it would be $70.28.

How Does Poshmark Commission Work?

You're likely aware that Poshmark takes a hefty 20% commission on your sales on the platform, but when is key information. Does your shipping discount get taken first, or after Poshmark's cut?

Sadly, it's after, which makes their cut larger (and thus makes sense).

In our first scenario (10% off/Free Shipping), since $90 (our offering price after the 10% price reduction) is more than $15* (see note below), the commission will be 20% of $90 which is $18.

Now subtract that $18 commission from your $90 (leaving you with $72), and then subtract the shipping cost of $7.67, and you'll get $64.33. That's how your final earnings for a $100 item are calculated if you offer 10% and free shipping.

[*Note: it's worth mentioning that commission on items under $15 is treated differently on Poshmark. According to their policy:

For all sales under $15, Poshmark takes a flat commission of $2.95. You keep the rest. For sales of $15 or more, you keep 80% of your sale and Poshmark's commission is 20%

You can review their full current commision policy here.]

With commission amounts in mind, let's see what happens when you offer a greater percentage off, but offer a lower shipping discount (thus reducing both Poshmark's commission amount and your own shipping discount loss).

Now, let's look at how commission looks when you offer 20% off to likers. Would a more modest shipping discount and a smaller commission for Poshmark=overall better earnings for a seller than a smaller percentage off and better shipping deal for the buyer? Let's find out.

20% off/Free Shipping

Buyer pays: $80 plus tax

Calculations: $80 sales price-20% commission ($16)=$64-$7.67 shipping=$56.33 seller earnings

20% off/$4.99 Shipping

Buyer pays: $84.99 plus tax

Calculations: $90 sales price-20% commission($16)=$64-$2.68 shipping discount=$61.32 seller earnings

20% off/$5.95 Shipping

Buyer pays: $85.95 plus tax

Calculations: $90 sales price-20% commission($16)=$64-$1.72 shipping discount=$62.28 seller earnings

Comparing the different offers, the 10% off/Free Shipping offer from our earlier example costs the buyer more than 20% off/$5.95 Shipping ($90 plus tax for 10% off/Free Shipping vs. $85.95 plus tax for 20% off/$5.95 Shipping ). The difference for the seller is slightly slimmer, but they'd earn a slightly higher $64.33 from 10%/Free Shipping than they would from 20% off/$5.95 Shipping: $62.28.

For a lower priced items, however, the differences are more pronounced: 20% off/$5.95 Shipping for a $25 item=$20 sales price-20% commission($4)=$16-$1.72 shipping discount=$14.48 seller earnings.

Compare that to 10%/Free Shipping, which nets a seller $10.33 ($22.5 sales price-$4.5 commission-$7.67 shipping). Yikes!

In summary,

Sell price=the amount your buyer pays after your price discount, and the amount Posh takes its 20% commission from
Poshmark does not take its commission post-shipping discount
Generous shipping discounts on low priced items often aren't worth it. Try incentivizing buyers to bundle low priced items for an overall discount instead
Poshmark's commission decreases as your sales price decreases, so padding your prices about to allow for steep discounts but more conservative shipping deals may be the best earnings strategy

Even better? Giving your buyers both a price cut and discounted shipping, but on Poshmark's dime. Check out our upcoming post on Closet Clearout and just how much taking advantage of this twice-to-thrice weekly promotion can save you big bucks on transactions.

We hope this post demystifies some of the fees associated with making offers on Poshmark. Did you find this helpful? Let us know below. Still have questions? Feel free to reach out to us for any questions below at [email protected].

Love and magic,

Alan & ClosetWitch Team

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